-Top News Economy UAE News

UAE Finance Ministry launches new transformational projects

These projects support the UAE Government’s efforts to accelerate the achievement of the government’s foresight objectives, with a focus on achieving financial results…reports Asian Lite News

The UAE Ministry of Finance has announced the implementation of transformational projects that support the country’s efforts to transition towards the future and enhance its competitiveness, in line with the ‘We the UAE 2031’ vision and the UAE’s efforts to become the global hub for the new economy over the next ten years.

These projects are unique in achieving a significant positive impact in all sectors within short periods of time. These projects support the UAE Government’s efforts to accelerate the achievement of the government’s foresight objectives, with a focus on achieving financial results in line with the ‘We the UAE 2031’ vision, which requires doubling efforts to achieve key national indicators of the vision positively reflecting on society and the country’s various industries and sectors.

Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, highlighted that the UAE, in its second 50-year journey, prioritises developing governmental work to be able to meet the future requirements of the nation by adopting new methodologies and ways of working through the digital transformation. He noted that these are pursued by the UAE to achieve a quantum leap in project implementation, budget preparation, and resource management.

He emphasised the Ministry’s efforts to develop government services by focusing on areas that enhance the competitiveness of the economic environment and its ability to attract foreign investments. Among these efforts are empowering Emiratis to represent the UAE internationally.

The first project, ‘Developing the Local Debt Capital Market in the Country’, is a joint project with the Central Bank of the UAE by establishing programmes for issuing local public debt instruments, represented by bonds and Islamic treasury sukuk in dirhams, and primarily trading them in the primary and secondary local markets, aiming to build and enhance the yield curve in UAE dirhams and provide reference pricing points for local financing operations carried out by financial institutions within the state, thereby enhancing market activity, expanding the investor base, and developing a highly efficient financial market in the UAE.

The Ministry of Finance is also working on implementing the project ‘Enhancing the Presence of Specialised Emirati Leadership in the Financial Field at International Forums’ which serves as the main supporter in making the UAE the most prominent in international cooperation over the next ten years.

This is a joint project with the Ministry of Foreign Affairs, aimed at investing in empowering national talents to occupy Emirati memberships in leadership positions within international organisations, their committees, or federations linked to the country’s agenda.

This will enhance the UAE’s presence in international forums and support its participation in shaping international strategic decisions and building economic partnerships with countries worldwide, through the leadership and membership of national talents from the Ministry of Finance in various international organisations, forums, and boards of directors.

ALSO READ: UAE climbs in global competitiveness ranking

Business Economy India News

Real Estate Calls for Budget Push

Expectations are high for tax reliefs and other sentiment boosters…reports Asian Lite News

Riding on supportive policy interventions and rising disposable incomes, India’s real estate sector is growing and needs a renewed push for affordable housing, especially in and around metro cities, from the Union Budget 2024-25, industry experts said on Thursday.

Expectations are high for tax reliefs and other sentiment boosters as the future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas.

According to Anuj Puri, Chairman of Anarock Group, the Indian housing sector remained upbeat in 2024 to date, with housing sales and new launches creating new peaks in the top 7 cities.

Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.

“However, this momentum must continue in the future too and the current growth trajectory is skewed towards mid-range and premium housing,” said Puri.

Considering the specific housing needs of India’s lower-income groups, this momentum cannot ride solely on higher-priced homes while affordable housing continues to languish.

Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years.

“This important segment must be revived with high-impact measures like tax breaks – for developers, so that they will focus more on affordable housing, and for buyers to improve affordability,” Puri noted.

Credit-linked subsidy scheme under PMAY, re-introducing 100 per cent tax holiday for affordable housing developers and tweaking the definition of affordable housing criteria to widen additional deductions benefits to more buyers can help the affordable housing players.

“The government must seriously reconsider revising the pricing of homes within the affordable housing budget, taking into consideration city-specific market dynamics.

“As per the current definition, the size of units at 60 sq. m. carpet area is appropriate. However, prices of units (up to Rs 45 lakh) are not viable across most cities,” Puri emphasised.

Meanwhile, according to a latest report by CRISIL Ratings, net leasing of commercial office space will see demand growth of 8-10 per cent in this fiscal and the next, amid the rising demand for residential and commercial real estate.

The primary drivers of the same will be global capability centres eyeing India’s large talent pool and competitive rentals, as well as healthy demand from domestic sectors.

Demand growth for residential real estate will sustain at 8-12 per cent this fiscal and the next, aided by favourable affordability and premiumisation, according to the CRISIL report.

ALSO READ: India, Cambodia explore UPI and investment treaty

Business Economy India News

India Now 3rd Largest Domestic Airline Market

Today, the US and China remain the largest domestic aviation markets….reports Asian Lite News

Driven by robust growth in the aviation sector in the last decade, India is now the third-largest domestic airline market in the world, up from 5th position 10 years ago.

Ten years ago, India was the smallest market with around 8 million seats, followed by Indonesia at 4th and Brazil at 3rd place, and the US and China occupying the top two positions.

Today, the US and China remain the largest domestic aviation markets.

“However, India is surpassing the Brazilian and Indonesian domestic markets to become the third-largest domestic market with airline capacity of 15.6 million seats in April 2024,” according to OAG data.

India’s capacity growth rate of seats over a 10-year average is the highest, growing at 6.9 per cent annually.

“India is the fastest growing market across all five domestic markets we considered. China was close behind with annual growth of 6.3 per cent between 2014 and 2024, and there is a much smaller growth rate in the US and Indonesia,” according to the data.

According to the OAG report, another interesting metric to consider across these large domestic markets is low-cost carrier (LCC) capacity share.

In April 2024, LCCs accounted for 78.4 per cent of domestic airline capacity in India, the highest LCC share of any of these five domestic markets.

“In the last 10 years, IndiGo has almost doubled their market share, from 32 per cent of capacity in 2014 to 62 per cent today. While the rest of the market has barely grown, averaging just 0.7 per cent a year, IndiGo has a domestic capacity growth rate of 13.9 per cent annually,” the report mentioned.

The country has seen robust growth under Prime Minister Narendra Modi, paving the way for shaping the future of the aviation industry for the next 25 years.

On November 19 last year, airlines in India flew 4,56,910 domestic passengers. This was the highest single-day air traffic since the pandemic hit, marking a remarkable 7.4 per cent surge above pre-Covid averages, as per the Civil Aviation Ministry’s data.

According to the government, the number of airports in the country has increased to 157 from 74 in the last 10 years.

More than 91 lakh passengers availed the facility of Digi Yatra, and over 35 lakh users downloaded the app in 2023.

Aviation Goes Green

As the world observes World Environment Day on Wednesday, significant attention is being directed towards the aviation industry’s ambitious sustainability goals, which include achieving net zero carbon emissions by 2050. Central to this vision are key technologies such as Sustainable Aviation Fuel (SAF) and electric aviation.

However, there is a notable near-term potential for sustainable practices within the Maintenance, Repair, and Overhaul (MRO) segment, which could yield significant environmental benefits.

Jaideep Mirchandani, Chairman of Sky One, emphasised the importance of sustainable MRO practices, while highlighting strategies like the re-utilization of parts, material recycling, and waste minimization as pivotal.

“Using serviceable parts instead of new ones can significantly reduce manufacturing pollutants. This action not only safeguards the environment but also helps preserve critical resources such as aluminium, steel, copper, and titanium,” Mirchandani said.

The shift towards sustainability in MRO is driven by various factors, including the increasing number of aircraft that require decommissioning. Off-wing MRO, which aims to reduce fuel usage and loss during repair and maintenance, is another approach enhancing environmental outcomes.

“As we move forward, the implementation of waste management and recycling measures will become commonplace in the contemporary aviation MRO industry. MRO service providers and airlines will work together to harmoniously combine efficiency and sustainable development for aviation’s sake,” Mirchandani added.

Christoph Schnellmann, Chief Executive Officer of Noida International Airport (NIA), echoed similar sentiments, underscoring the airport’s commitment to sustainability.

He said that Noida Airport is being developed with a vision to become India’s leading greenfield airport, adhering to an ambitious net zero emission philosophy.

“Sustainability and environmental impact were key criteria in selecting the airport’s planning and design teams, construction partners, and concessionaires,” Schnellmann noted.

The NIA has planned various environment-friendly initiatives, including the use of renewable energy, rainwater harvesting, an onsite waste management facility, a sewage treatment plant, and electric ground support equipment.

“Our EPC contractor has also utilised breakthrough technology from Nanogence Catalyst, a patented smart activator that enhances the binding efficiency of cementitious material, providing high material performance while reducing carbon emissions,” Schnellmann said.

Belson Coutinho, Co-Founder and Chief Marketing & Experience Officer, Akasa Air, said that they have undertaken a holistic and action-oriented approach, launching several initiatives that offer passengers an all-round environmentally progressive travel experience.

“These include fuel-efficient engines, sustainably curated crew uniforms and eco-friendly inflight meal packaging. A key decision in our journey since inception, was to move away from the ceremonial water cannon salutes at flight and route inaugurations in order to conserve water, which has resulted in saving approximately 3,36,000 litres of water to date,” said Coutinho.

IndiGo airline said that they have been investing in a new, more energy efficient fleet, replacing the older generation Airbus CEOs in their fleet with NEO aircraft.

“These aircraft are fitted with latest generation engines which have the potential to reduce fuel usage by 15 percent and cut greenhouse gas (GHG) emissions and are 50 percent quieter (source: Airbus) than the older generation aircraft. This has already led to a CO2 reduction of 20 percent per available seat kilometre between FY23 and FY16,” it said.

“On an operational level, we are making a series of investments towards more responsible flying including single engine taxiing, optimal climb and descent profile, electronic flight bags and water conservation techniques on-board. Our initiatives on the ground, such as the usage of renewable energy sources at our training centre and few stations, and electrification of IndiGo vehicles at the airports, are a few highlights,” it said.

ALSO READ: India, Cambodia explore UPI and investment treaty

-Top News Asia News Economy

Bhutan Gets $40M Loan from ADB

The concessional loan aims to support policy reforms in expanding domestic resource mobilisation, promoting private sector development…reports Asian Lite news

The Asian Development Bank (ADB) on Thursday said it has approved a policy-based loan of 40 million US dollars to help Bhutan further strengthen its public financial management and green growth.

The concessional loan aims to support policy reforms in expanding domestic resource mobilisation, promoting private sector development, and introducing climate change adaptation and mitigation measures, Xinhua news agency reported.

Under the program, domestic resource mobilisation is expected to be strengthened by improving customs and property tax administration, implementing a medium-term revenue strategy, and enhancing the governance and management of state-owned enterprises.

“This will significantly reduce the gap between current expenditures and tax revenues. The rollout of an integrated financial management information system will improve public financial management,” the ADB said.

It added the program will help promote private sector development and streamline, modernise and digitise investment, business processes and trade services to enhance the ease of doing business in the country.

ALSO READ: Jaishankar calls on PMs of Mauritius, Bhutan, Nepal

-Top News Economy UK News

UK inflation falls to lowest level in almost three years

Even though inflation is falling, it does not mean the prices of goods and services overall are coming down, just that they are rising at a slower pace…reports Asian Lite News

Inflation has hit the Bank of England’s target for the first time in almost three years. Prices rose at 2% in the year to May, down from 2.3% the month before, official figures show.

The economy is a key talking point in the run-up to the general election on 4 July, with all of the main parties battling over how they would keep the cost of living under control.

The Conservatives said their “difficult decisions” were paying off, but Labour said pressures on family finances were “still acute”.

The drop in May’s inflation figure was driven by a slight fall in prices for food and soft drinks, and slower price rises for recreation and culture and furniture and household goods.

However, petrol prices are rising again, and food prices are still 25% higher than at the beginning of 2022. The inflation figure comes ahead of the Bank of England’s latest decision on UK interest rates this Thursday.

The bank is expected to hold the rate at 5.25% – a 16-year high – for the seventh meeting in a row. Markets have now also cut bets that the Bank of England will slash rates at its next opportunity in August. That is because price rises in the services sector remain high at 5.7% in the 12 months to May.

Inflation has fallen steadily since October 2022, when Russia’s invasion of Ukraine caused it to peak at 11.1% as food and fuel prices soared. But millions of households are still struggling with the cost of living.

Even though inflation is falling, it does not mean the prices of goods and services overall are coming down, just that they are rising at a slower pace.

The Bank of England has also put up interest rates to try to dampen down consumer demand, driving up mortgage rates and rents. Offical figures on renting – also released on Wednesday – showed average rents paid to private landlords in the UK rose by 8.7% in the year to June.

Meanwhile, even with the inflation rate falling, mortgage rates remain stubbornly high as lenders wait for the Bank of England’s next and subsequent moves on interest rates.

May’s inflation figure is the last big official economic statistic before the general election and has sparked significant debate among the main parties. The Conservatives claim the figures back up their story of an economic turnaround – although the question for them politically is whether they get any credit for the fall.

Chancellor Jeremy Hunt said the UK’s inflation rate was now lower than “nearly all” major economies. “That would not have happened under Labour that refused to condemn the public sector pay strikes, that would have meant inflationary pay rises, inflation lasting longer,” he added.

But Labour continue to press concerns about an ongoing cost of living crisis.

Rachel Reeves, Labour’s shadow chancellor, told the BBC: “Unlike Conservative ministers, I’m not going to tell people that everything’s fine.

“I know that the cost of living crisis is still acute, that even though inflation is falling, it doesn’t mean the prices are coming down, they’re just rising at a less fast rate.”

Liberal Democrat Treasury spokeswoman Sarah Olney said millions of people wouldn’t be feeling any better off. “Rishi Sunak’s boasts will ring hollow to countless families seeing their mortgages skyrocket and agonising rises in shopping prices compared to just a few years ago.”

Attempts by politicians to apportion blame for high inflation, or claim credit for it falling, should be treated with caution. The soaring cost of living was mainly driven by the pandemic and Russia’s war in Ukraine which drove up global commodity prices.

Meanwhile, falling inflation was largely due to declining wholesale energy and food prices, along with 14 rate hikes by the Bank of England.

ALSO READ-Milk prices surge as Pakistan faces high inflation

Business Economy India News

India’s Pharma Exports Boom

India is now the world’s third-largest drugmaker by volume amid the growing demand for the country’s pharmaceutical products in export markets….reports Asian Lite News

India’s pharmaceutical exports continue to register double-digit growth, reflecting the strong demand for the country’s affordable generic medicines in global markets led by the USA and UK.

India’s pharma exports grew by 10.45 per cent in May this year to touch the $2.3 billion mark compared with the $2.08 billion in the same month of the previous financial year.

“It is moving in a positive way and we are optimistic of sustaining growth of not less than 10 per cent,” Director General, Pharmaceuticals Export Promotion Council of India, Ravi Uday Bhaskar said on the quick estimate numbers released last week by the Centre.

India is now the world’s third-largest drugmaker by volume amid the growing demand for the country’s pharmaceutical products in export markets.

The US is a key market, which accounts for about 30 per cent of India’s annual pharma exports after a nearly 16 per cent increase in fiscal 2024, according to Pharmexcil.

The country’s drug shortages as well as the increased use of drugs for lifestyle diseases such as diabetes, hypertension and depression is expected to fuel the demand for India’s affordably priced drugs, according to Bhaskar.

According to a report by India Ratings and Research, Indian drugmakers will sustain their revenue improvement in 2024-2025 due to drug shortages in the United States. India is a hub of bulk generic drug manufacturing and drugmakers including Dr Reddy’s, Cipla, Sun Pharma derive a significant share of revenue from both the US and Europe.

The world’s largest drug market is facing decade-high drug shortages, India Ratings said in a note citing data from with Utah Drug Information Service.

There is an active shortage of 233 drugs across 22 therapeutic categories as of April, led mainly by discontinuing production of some drugs, rising demand and delays in shipments, it said, also citing data from the US Food and Drug Administration.

ALSO READ: India’s ‘Electric’ Awakening

Economy Health India News

Connected Health to Drive 22% of Life Sciences Revenue

The report also found that there has been a six-fold increase in biopharma organisations with market-ready connected products since 2021….reports Asian Lite News

As the majority (63 per cent) of Life Sciences organisations, across biopharma and medtech, have connected health products already on the market or under development, the industry anticipates that connected health will contribute more than one-fifth of their total revenue (22 per cent) in the next five years, a new report showed on Tuesday.

According to the IT firm Capgemini, three in five Life Sciences organisations are currently developing a roadmap for integrating Generative AI, and over half are already piloting genAI for interactions with patients and healthcare providers (HCPs).

“Unlocking the power of healthcare data and leveraging the possibilities posed by breakthrough technologies, such as Generative AI, will be at the heart of this connected health revolution,” said Thorsten Rall, Global Life Sciences Industry Leader at Capgemini.

“They can accelerate drug development, enhance patient care, and have the potential to reshape what ‘product’ actually means for pharmaceuticals, especially medtech companies,” he added.

The report surveyed 420 industry executives from various biotechnology, pharmaceutical (biopharma), and medtech organisations exploring connected health initiatives with annual revenues exceeding $500 million.

The report also found that there has been a six-fold increase in biopharma organisations with market-ready connected products since 2021.

Oncology, immunology, and cardiology are primary focuses for most biopharma companies, with emerging areas such as mental health, diabetes, obesity, and dermatology also showing huge growth since 2021.

According to the report, biopharma organisations have made significant progress in leveraging AI, Machine Learning (ML) and Cloud in the last three years.

Biopharma organisations using AI for predictive analysis of real-time data from connected health products have almost doubled since 2021 from 24 per cent to 46 per cent.

As per the report, over two-fifths (42 per cent) also have a Cloud platform in place for data integration from different sources.

However, only a minority of Life Sciences organisations mentioned that they had an adequate supply of technical skills such as AR/VR and Generative AI, according to the report.

ALSO READ: India’s ‘Electric’ Awakening

-Top News Economy India News

Economists seek capital expenditure during pre-budget meet with FM

Industry bodies, including the Confederation of Indian Industry (CII), urged the government to increase capital expenditure in the upcoming budget. During the discussions, economists also highlighted on the need to boost capital expenditure…reports Asian Lite News

Finance Minister Nirmala Sitharaman chaired the first pre-budget meeting with leading economists in Delhi on Wednesday as part of pre-budget consultations for the General Budget 2024-25.

The discussions focused on critical issues such as boosting capital expenditure and reducing the fiscal deficit.

During the discussion, economists emphasized that the fiscal deficit will be further reduced in the upcoming budget, and the government is concentrating on policies to generate employment growth.

“The government has shown fiscal prudence and has controlled fiscal deficit. This time, revised estimates also show positive indications. The government has already stated that the fiscal deficit will be lower in the budget. At the same time, employment remained an important issue of discussion” said Ashwani Mahajan, National Co-convener of the Swadeshi Jagaran Manch.

On the demand for granting special status to some states, Mahajan added, “There’s nothing on special status for states. The government is already doing a lot on capital expenditure, with at least more than 3 per cent of GDP being spent on it.”

Industry bodies, including the Confederation of Indian Industry (CII), urged the government to increase capital expenditure in the upcoming budget. During the discussions, economists also highlighted on the need to boost capital expenditure.

“It is very much in the discussion, that CapEx (Capital Expenditure) has driven or helped to drive the growth of the economy, which should be sustained. And private sector investment and consumption growth should also be sort of pushed to sustain this growth” said Nagesh Kumar, Director and Chief Executive of the Institute of Studies in Industrial Development.

The meeting was attended by the Finance Secretary, and the Secretaries of the Departments of Economic Affairs, Revenue, Financial Services, and Corporate Affairs, along with the Chief Economic Adviser of India.

These discussions with industry experts and economists are crucial as they lay the groundwork for the government’s fiscal policy and economic strategies in the forthcoming budget.

reparation for the upcoming Union Budget 2024-25 commenced in Delhi on Thursday. Finance Minister Nirmala Sitharaman has directed officials to initiate the budget preparation process, emphasizing the need for meticulous planning and comprehensive analysis.

This early start aims to ensure a well-structured budget that effectively addresses the country’s economic priorities and challenges. The collaborative efforts of the ministry’s team are expected to contribute to a robust and strategic financial plan for the upcoming fiscal year.

According to sources, the Union Budget for 2024-25 is likely to be tabled in Parliament by the third week of July. Earlier, on February 1, Finance Minister Nirmala Sitharaman presented the interim budget for 2024-2025 in Parliament due to the election year.

The Interim Budget is presented by a government that is either in a transition period or in its last year in office ahead of general elections. The purpose of the interim budget is to ensure the continuity of government expenditure and essential services until the new government can present a full-fledged budget after taking office.

Now, after the election results, Finance Minister Nirmala Sitharaman will present her seventh budget in a row. It will also be the full budget for the year 2024-25.

In the February interim budget, the government focused on economic policies that foster growth, facilitate inclusive development, improve productivity, and create opportunities for various sections, while noting that it will pay utmost attention to the eastern region, including the states of Bihar, Jharkhand, Chhattisgarh, Odisha, and West Bengal, to make them growth engines as part of the goal to make India a developed country by 2047.

In her second stint, Nirmala Sitharaman formally assumed charge as Union Minister of Finance and Corporate Affairs on Wednesday morning.

She was greeted at the office in North Block by Finance Secretary TV Somanathan and other Secretaries of the Ministry of Finance and Corporate Affairs.

Nirmala Sitharaman, who has been a Union Minister in both the 2014 and 2019 Modi cabinets, took oath as Union Cabinet Minister in Prime Minister Narendra Modi’s new Union Council of Ministers on Sunday evening in the forecourt of Rashtrapati Bhavan, along with another 70 Council of Ministers. (ANI)

ALSO READ-Nirmala accuses Congress of misleading people

Economy India News

41% of Indians Balancing Multiple Jobs: Report

Interestingly, the survey shows the education sector leads the pack with the highest satisfaction rate (88 per cent)….reports Asian Lite News

About 41 per cent of Indian workers now have two or more sources of income, the highest among 18 surveyed countries, as there has been a substantial rise in salary satisfaction among the Indian professionals, a report showed on Tuesday.

The salary satisfaction jumped from 49 per cent to 73 per cent in 2023, again the highest among 18 countries, according to ADP’s annual survey, titled ‘People at Work 2024: A Global Workforce View’.

With salary continuing to be the most important factor for Indian workers surveyed in a job (55 per cent), it is no surprise that Indian respondents’ job satisfaction rate remains the highest among the 18 countries surveyed — at 81 per cent.

Satisfaction rates vary slightly by gender, with female respondents expressing higher contentment (84 per cent) than male respondents (78 per cent).

Interestingly, the survey shows the education sector leads the pack with the highest satisfaction rate (88 per cent).

“It’s encouraging to see workers more satisfied with their compensation, which translates to more productive and engaged workforces. Amid the strong economic growth and the war for talent, employers need to offer fair compensation to ensure the financial security and overall well-being of their workforce,” said Rahul Goyal, Managing Director, ADP India & Southeast Asia.

Despite the importance of pay, it is worth noting that more than half of Indian workers surveyed (55 per cent) regularly receive incorrect payments.

“This highlights the importance of having a robust payroll system to ensure timely and precise compensation,” said Goyal.

ALSO READ: India’s ‘Electric’ Awakening

Business Economy India News

28% GST on Gaming Firms Leads to Fallout

Notably, the impact of the GST also depends upon the formats. For instance, in the case of casual games, the exponential increase in GST is threatening the business viability…reports Asian Lite News

New Delhi, June 19 (IANS) The 28 per cent GST on skill-based online games has triggered a cascade of repercussions, including funding constraints, reduced growth trajectories, job losses, and heightened uncertainty across the sector, a report said on Wednesday.

Since October last year, a uniform 28 per cent GST has been imposed on the full value of bets placed in online games, while the gaming companies seek to levy 28 per cent GST on Gross Gaming Revenue (GGR) that is earned by the industry.

A review of the levy may be discussed at the upcoming GST Council meeting on June 22 but nothing has been finalised yet.

A joint report by Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF) has shed fresh light on the profound challenges faced by India’s pay-to-play online skill gaming industry following the recent GST tax amendments levying 28 per cent on deposits.

The report highlighted the impact of the pay-to-play model that has been at the receiving end of the revised GST regime. The games are fantasy games, card games and casual games.

According to the findings, since 2019, the Indian gaming sector has attracted FDI of $2.6 billion from domestic and global investors and 90 per cent of the FDI was attracted in the pay-to-play format of the online gaming sector.

“Since October 2023, some companies reported a complete withdrawal of global marque investors just at the onset of the new GST regime,” the report stated.

Before the amendment, the GST cost constituted 15.25 per cent of the revenue. However, since October 1, 2023, the GST cost has increased manifold, with GST now consuming 50-100 per cent of the revenue for 33 per cent of companies and even surpassing total revenue for startups.

“These startups now have to operate at a loss,” the report argued.

Notably, the impact of the GST also depends upon the formats. For instance, in the case of casual games, the exponential increase in GST is threatening the business viability.

“Over half of the sector’s enterprises are either staring at stagnant revenues or shrinking topline, with 25 per cent experiencing growth declines of up to 50 per cent. This marks a stark departure from previous growth rates exceeding 100-200 per cent,” said the report.

Decreased margins due to increased GST (being absorbed by the companies) had a ripple-down effect in employee layoffs and a complete pause in hiring specialist skills such as technology, product, animation, and design.

“Most companies have reported impacted jobs in terms of no hiring, layoffs, and shutting down operations altogether. The new GST regime has created concerns around the viability of the sector and is keeping away the right talent from joining the workforce, further exacerbating the sector’s woes,” said the report.

The report recommended amending the valuation mechanism for online money games to levy GST from the current “full-face value of total deposits” to GGR/platform fees — the amount retained by online gaming platforms for operating a game.

In October last year, the GST authorities issued show-cause notices demanding as much as Rs 1 lakh crore from online gaming companies for tax evasion.

ALSO READ: India’s ‘Electric’ Awakening